Challenges Facing the Hospitality Industry

Challenges Facing the Hospitality Industry

Orange County Business Journal

One of the biggest challenges for the hospitality industry is the balancing act between customer service and the related internal controls that go into running a hotel, resort or restaurant. While the benefits of exemplary customer service are obvious (e.g. more repeat business, referrals, commanding premium rates, higher profits), they can come with a hefty price tag if not managed properly.

When senior executives, managers, supervisors and line employees are incentivized around getting customers to return, financial controls may suffer. To mitigate these risks, now may be a good time to perform a “ checkup” on your control environment. While a control environment checkup can be a high-level overview or a deep dive, you should consider reviewing the following:

1. Separation of duties and proper cross-training of employees. This is especially important around cash transactions.

2. Written policies and procedures. Often, gaps and risks are highlighted when policies and procedures are documented. At a minimum, your policies should encompass the following:

  • Sales and accounts receivable
  • Cash management and banking
  • Purchases and accounts payable
  • Payroll and human resources.
  • Financial statement reporting and closing cycle

3. Review and oversight – control monitoring procedures. A periodic review of key performance metrics, such as sales, expense accounts, cash, and payroll reports and other data on a regular basis may help identify problems that exist.

4. Information technology and security measures. Employees are often granted more access to IT systems than they actually need to perform their assigned tasks. A review of existing user controls can easily identify which employees have too much access. In addition, outside threats from hackers and disgruntled employees may try to penetrate your firewalls and access your reservation system. For example, the 2018 Marriott data breach exposed the personal information of up to 500 million people and was one of the largest data breaches of all time.

5. Change management. In the competitive and innovative world of hospitality, it is imperative to develop new strategies to drive bottom-line results. Risks, if not identified as your organization changes, can have a significant impact on your business as your internal processes change and overall strategies evolve. Staying on top of the issues impacting your business is critical when it comes to maintaining a healthy and vibrant operation. If you are looking to add that extra ingredient to your hotelʼ s success, we offer a comprehensive range of services to address business challenges and opportunities for improving efficiency and profitability.

Gordon S. MacLean, CPA

Gordon is a Partner and the Director of Audit Services at RJI. He has over 30 years of experience, including 20 years at a Big 4 firm. He specializes in audits of publicly traded and privately held businesses in the not-for-profit, manufacturing, technology, medical device, real estate, hospitality, distribution, and professional services industries. Gordon can be reached at (949)852-1600 or at

Julien Christensen, CPA

Julien is an Audit Senior Manager at RJI. He has over 10 years of experience in both public and private accounting, covering several industries, including hotels, restaurants, hospitality, manufacturing, real estate, healthcare, and technology. Julien also specializes in SEC filings. Julien can be reached at (949) 852-1600 or at

About RJI International CPAs
Established in 1980, RJI specializes in audit, accounting, corporate and interna­tional tax issues for publicly traded and privately held companies. RJI is PCAOB registered and the Southern California member firm of DFK International, one of the largest accounting networks in the world.


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